Help to Buy vs 5% Deposit Scheme: 2026 Compare

If you're a first home buyer in Australia in 2026, two federal schemes dominate the conversation: Help to Buy (shared equity) and the First Home Guarantee (the 5% deposit scheme). Both aim to get you into your own home sooner, but they work in fundamentally different ways, and choosing the wrong one could cost you tens of thousands of dollars over the life of your loan.

This guide breaks down both schemes, compares them across real scenarios, and helps you figure out which one actually suits your situation.

How Help to Buy works

The federal government becomes a silent co-owner of your home. They contribute up to 40% of the purchase price for a new build or 30% for an existing property. You only need a 2% deposit, and you only take a mortgage on your share (60% or 70%).

Key rules:

• Income cap: $103,000 for singles, $165,000 for couples and single parents.
• Property price caps vary by state (e.g. $1.3M in Sydney, $1M in Brisbane).
• You don't pay rent on the government's share, but you repay it when you sell, based on the property's value at sale.
• If the property goes up in value, the government's dollar share goes up too. If it drops, their share drops.
• Now available across all states and territories, with the rollout completed in Tasmania in June 2026.

How the 5% Deposit Scheme works

The First Home Guarantee (often called the "5% deposit scheme") lets you buy with just a 5% deposit and no Lenders Mortgage Insurance (LMI). The government guarantees the difference between your 5% and the 20% lenders normally require.

Key rules:

• No income cap. Unlike Help to Buy, there's no income limit (though individual lenders have their own criteria).
• Property price caps are generally higher (e.g. $1.5M in NSW).
• Unlimited places from October 2025, so no more scrambling for spots.
• You own 100% of your home from day one. No government share to repay.
• Your mortgage covers the full 95% of the purchase price.

The core trade-off

This is where most comparisons stop, but it's the most important part.

Help to Buy gives you a smaller mortgage but a shared ownership obligation. The 5% Deposit Scheme gives you a bigger mortgage but full ownership from day one.

What does this mean in practice?

• Monthly repayments: Help to Buy wins here. Because your loan is only 60% of the property value (new build), your repayments are significantly lower.
• Total wealth at sale: This is where it gets complicated. With Help to Buy, when you sell, the government takes their 40% (or 30%) of the sale price. If your property grew in value, that's a large chunk going back to them.
• Flexibility: The 5% scheme has fewer strings. You can renovate freely, rent it out after the first year, and sell without repaying a government share.

Scenario 1: Single buyer on $85,000

Sarah earns $85,000 and wants to buy a $650,000 apartment in Brisbane.

• Help to Buy: She needs $13,000 (2%) deposit. Her loan is $377,000 (58% after deposit). Monthly repayments around $2,560 at7.2% over 30 years. If the property grows to $780,000 in 7 years and she sells, the government takes 40% = $312,000. She keeps $468,000 minus the remaining loan balance.
• 5% Deposit: She needs $32,500 (5%) deposit. Her loan is $617,500 (95%). Monthly repayments around $4,190 at 7.2%. Higher repayments, but if she sells at $780,000, she keeps everything minus her remaining loan balance.

For Sarah, Help to Buy makes sense if she's stretching to afford the repayments and needs breathing room. But if she can handle the higher repayments, the 5% scheme builds more long-term wealth.

Scenario 2: Couple on $145,000 combined

James and Priya earn $145,000 combined and are looking at a $850,000 house in Melbourne's outer suburbs.

• Help to Buy: $17,000 deposit (2%), loan of $578,000 (68% for existing). Repayments around $3,920 at 7.2%. At sale after 10 years (property at $1.14M), the government takes 30% = $342,000.
• 5% Deposit: $42,500 deposit (5%), loan of $807,500. Repayments around $5,480 at 7.2%. At sale they keep the full $1.14M minus loan balance.

The roughly $1,560/month difference in repayments is significant. If James and Priya invest that difference in an index fund averaging 7% returns, the invested savings could partially offset the government's share at sale. This is exactly the kind of scenario our Scheme Comparison Tool models in detail.

Scenario 3: Single parent on $70,000

Mei is a single parent earning $70,000, looking at a $500,000 property in regional QLD.

• Help to Buy: $10,000 deposit. Loan of $290,000. Repayments around $1,970 at 7.2%. Plus QLD's $30,000 FHOG for new builds.
• 5% Deposit: $25,000 deposit. Loan of $475,000. Repayments around $3,220 at 7.2%.

For Mei, the roughly $1,260/month difference could be the difference between comfortably affording her home and being in mortgage stress. Help to Buy is likely the better choice here, especially when stacked with the QLD FHOG.

Use the Grant Stacker to see every grant and concession Mei could access.

When Help to Buy wins

• You're on a lower income and need affordable repayments
• You plan to live in the home long-term (10+ years)
• You're buying a new build (40% government share is larger)
• You want the smallest possible deposit ($13k on a $650k home)
• You're in a slow-growth area where the government's share won't balloon

When the 5% Deposit Scheme wins

• You can comfortably afford the higher repayments
• You want full ownership with no strings attached
• You earn above $103,000 single / $165,000 couple (Help to Buy income cap)
• You're buying in a high-growth area and want to keep all the upside
• You might want to renovate, rent out, or sell within a few years

Can you use both?

No. You can only use one federal scheme at a time. However, both schemes can be stacked with state-level grants and concessions like the First Home Owner Grant (FHOG) and stamp duty concessions. Queensland buyers can also consider Boost to Buy, the state-level shared equity scheme with higher income caps ($150k single / $225k couple).

The bottom line

There's no universal answer. Help to Buy is powerful for buyers who need lower repayments and are comfortable sharing ownership. The 5% Deposit Scheme is better for those who can handle a bigger loan and want full control from day one.

The best way to decide is to run your actual numbers through our Scheme Comparison Tool. It models both schemes with your income, property price, and investment assumptions to show you the total wealth impact over time.

And if you're not sure how much you can borrow in the first place, start with the Borrowing Power Calculator to see how each scheme affects your capacity.